Story TOpics

Wall Street was not happy when House Majority Leader Eric Cantor lost his primary earlier this month. Boeing lost 3 percent of its stock value the next morning, and business interests began wondering about the Export-Import Bank’s future. Boeing has always been a major beneficiary of Ex-Im Bank support, and the bank is known to many as the “Bank of Boeing.”

The bank’s charter will lapse on Sept. 30, and opposition to congressional renewal has been growing. Mr. Cantor has been a strong supporter of renewing the charter, but in the wake of his loss, he says he won’t participate in the upcoming fight.

Sometimes symbolic issues trump objectively bigger issues in the public mind and become far more important to politicians and the public than anyone could predict. When Ronald Reagan began raising the Panama Canal as an issue in the 1970s, it quickly became a symbolic way of highlighting the differences in the way Mr. Reagan and his opponents inside and outside the Republican Party saw the world and thought U.S. foreign policy should be conducted. The canal debate had a profound impact on the politics of the time.

The Ex-Im Bank may be the domestic Panama Canal of today. The government’s relationship with the business community divides the conservative coalition making up the base of today’s GOP more deeply than most other issues on which the two factions differ. A recent Pew Research Center survey on the political views of America’s voters underscored the differences between Republican, Democrats, liberals and conservatives and sought to examine views within these broader categories. Analysts divided the conservative base of the GOP into two broad categories: “steadfast conservatives” and “business conservatives.” The two groups have much in common, but feel very differently about what has come to be called “crony capitalism” and the tendency of politicians to cozy up to big business at the expense of ordinary Americans.

This divide is evident in the opposition of “Tea Party” voters to “establishment” Republicans in this year’s primaries. Pew’s “business conservatives” are comfortable with the big business/government relationship; 67 percent say big business does not have too much power, while only 29 percent of “steadfast conservatives” agree. The conservative view of government’s proper role vis-a-vis big business is at the heart of the Tea Party-establishment divide.

Other studies have shown this same divide when it comes to “fairness,” the deficit, and the Republican congressional leadership’s willingness to compromise with Democrats on such issues. The problem with many of the issues symbolizing this divide, however, is that they are difficult to understand, have implications that few wish to contemplate, and are far more complicated than they at first seem. Conservatives confronted these same sorts of complications as they tried to engage “moderates” on foreign-policy questions in the ‘70s. They were told constantly that they just couldn’t understand the subtleties involved and ought to leave the discussion to those who did. Then along came Ronald Reagan and the Panama Canal. Few Americans had thought about the canal until Reagan raised the issue, but it was simply explained: We built it, it’s ours and we should keep it. It crystalized the debate in a way that more complicated issues couldn’t and helped catapult a former actor and California governor into the White House.

Rep. Jeb Hensarling, Texas Republican, who chairs the House Financial Services Committee, attacked the Ex-Im Bank in a major Heritage Foundation speech earlier this year and is leading the fight against renewing its charter. He calls the bank “the face of cronyism,” and many conservatives agree. They view support for its renewal as proof that a politician is in the pocket of established business interests. They see the full-court press for renewal of the bank’s charter by the Chamber of Commerce, the National Association of Manufacturers and the army of lobbyists being assembled by recipients of Ex-Im Bank’s largesse and loan guarantees as proof of their suspicions, and they reject the contention of bank supporters that America’s international trade and hundreds of thousands of jobs depend on the bank.

The forces supporting Ex-Im Bank renewal were right to be worried about the Cantor defeat. Rep. Kevin McCarthy, Mr. Cantor’s replacement-to-be as majority leader, quickly announced that he is no friend of the bank and would be happy to see its charter lapse. What’s more, the case for renewal has been significantly undermined by research coming out of the Mercatus Center at Virginia’s George Mason University. Mercatus scholar Veronique de Rugy testified before Mr. Hensarling’s committee recently, pointing out that contrary to the claim that the Ex-Im Bank loans and loan guarantees go to support small businesses against subsidized foreign competitors, Ex-Im Bank’s largesse flows mainly to huge U.S. and foreign firms and investors such as Boeing, General Electric, Caterpillar, Ethiopian Airlines and Russia’s oligarchs while destroying jobs in some U.S. industries as it favors others. She sees the bank as little more than an example of “naked corporate cronyism,” a view shared by the Heritage Foundation’s Stephen Moore and business columnist Larry Kudlow, who argues that “if the Republican Party truly wants to change its image of bailing out big banks and businesses, now is the time.”

Corporate and association lobbyists will swarm Washington as the Sept. 30 deadline approaches. The question of whether the Export-Import Bank will be with us in October won’t be decided until the last minute, but the vote could be a bigger test for business conservatism versus populist conservatism than anything the Hill and the Republicans have seen thus far.